Influencer Marketing, Legalities, & Expert Witnesses

In recent years, there has been a robust and lively debate over what types of marketing are the most effective, as well as which ones may face the most significant ethical and/or legal complications. Of late, more and more companies have been utilizing a tool called “influencer marketing,” particularly on social media. In fact, some 60% of companies/brands already use this form of marketing, with 75% claiming they will by the year’s end. See, e.g., Amy Callahan, “Protecting Your Brand: Brand Safety for Influencer Marketers,” Huffington Post, Sep. 11, 2017, athttps://www.huffingtonpost.com/entry/protecting-your-brand-brand-safety-for-influencer_us_59b6dcd3e4b0bb893ffffffc (last visited Nov. 29, 2017).

This article explores potential legal and ethical issues involved with influencer marketing on social media, as well as the role expert witnesses play before and during litigation that pertains to such marketing strategies.

Discussion:

The concept of influencer marketing is not new, in itself, but its presence and prevalence in social media is. See, e.g., Global Yodel, supra. The concept having a third party endorse or sponsor a company’s good or service has been around for perhaps as long as the advertising industry, itself. However, the trend towards using this type of marketing online and/or on social media platforms has evolved recently, and the federal regulatory agencies have tried to keep pace with that trend. See, e.g., Amy Callahan, supra.

Part of understanding the shift towards this type of marketing is simple—it involves engaging influential individuals in pushing a product or service, rather than a company, itself, which, in turn, may cause consumers to believe that the “influencer’s” rave reviews of a company are objective. See, e.g., John Hall, “The Influencer Marketing Gold Rush Is Coming: Are You Prepared?”, Forbes, Aug. 17, 2016. For example, some companies provide free goods to individuals, and then ask such individuals to review their products. It is also understandable why and how such marketing has become so prevalent on social media—because technology has caused many individuals to do so much interacting on internet-based platforms, it follows that companies would actively campaign in such locations.

Such marketing campaigns often target thousands of people and ask their “influencers” to provide positive feedback about a good or service. At that point, companies can then select the most favorable reviews they receive, post such reviews, and ask or provide incentives for their “influencers” to give good ratings of their product or service on consumer opinion pages (e.g.: Yelp! or Google Reviews) and social media platforms (e.g.: Facebook and Instagram). Another advantage to businesses that use influencer marketing is that while individuals who use social media may block a particular company’s ads, they don’t typically block a friend or influential individual’s referral to that company. See, e.g., id. In this way, companies can enjoy the benefits of marketing on social media and avoid certain pitfalls, ideally achieving maximum success.

However, there is a legal and an ethical issue at play with influencer marketing, which have to do with: (1). the veracity of influencers and their ads, reviews, or referrals; (2). the relationship between a company and its influencers; and (3). many other issues that the Federal Trade Commission has enumerated. See Lesley Fair, “Three FTC actions of interest to influencers,” Federal Trade Commission, Sep. 7, 2017, athttps://www.ftc.gov/news-events/blogs/business-blog/2017/09/three-ftc-actions-interest-influencers (last visited Nov. 29, 2017).

One very prominent social media platform, for example, noticed that a large number of influencers’ accounts were actually fake accounts that generated “likes” based on a computerized system, or a “bot,” as many lay people would call it. See, e.g., Carisso Lintao, supra. The FTC has even stepped in to provide guidelines as to how to act ethically and legally, if an entity or individual is engaged in influencer marketing. See, e.g., Lesley Fair, supra. A recent conference with national advertising and legal organizations highlights the many legal questions and pitfalls that can accompany influencer marketing that is not done in an ethical way or is not in conformity with FTC rules, guidelines, and/or other applicable laws. See, e.g., David Kluft & Neil Austin, “10 Marketing Law Takeaways From ANA/BAA 2017,” Mondaq, Nov. 17, 2017, athttp://www.trademarkandcopyrightlawblog.com/2017/11/10-marketing-law-takeaways-from-anabaa-2017/?utm_source=Mondaq&utm_medium=syndication&utm_campaign=View-Original (last visited Nov. 29, 2017).

Where do expert witnesses come into this equation, in situations in which influencer marketing is both a prospective boon to businesses, but may also create a major legal quagmire? Influencer marketing experts are extremely useful to businesses (and corporate, social media, marketing, and/or ad-related counsel) as consultants, and they should be retained by any company that engages in such strategies to market their brands. Not only can expert consultants weigh in on how to interpret FTC and other potentially-applicable policies and laws, but they can provide individualized assistance to their clients. For example, experts can help to spot fake accounts, determine if a guideline is met, assess whether an influencer’s relationship to a company is too close or not, and more. This is particularly important, given that the FTC has issued legal guidelines over time, and it is expected to continue to carefully monitor influencer marketing and crack down on violations of its rules. Experts in the field are essential to keep up with government policies and advise clients how to stay within the law.

Once a lawsuit is filed against a given business, testifying experts will be invaluable to both sides of the case. For instance, such experts can express why or how a business and/or its influencers violated a rule, to what extent an alleged violation was (Intentional? Reckless? Negligent? Negligible? Not at all?), and what, if any, damages are appropriate. Moreover, such experts can attest to where (if any) the responsibility for crossing the line should legally lie: with the company itself, the influencer(s), both, or neither? Testifying experts on influencer marketing can also speak to the regulatory history, intent, and applicability of government policies in specific cases.

Businesses should retain influencer marketing experts, because they may be on either side of this type of litigation. Some companies may find themselves the victims of fake influencers, and their best recourse may be to take legal action and help salvage their reputation, by showing the courts and public that they were the ones who were wronged, not the wrongdoers. Influencers should be aware of what is ethical and legal and what is not, so that they can protect themselves and defend their actions in court, if necessary. And certainly, marketing and advertising firms that provide influencer marketing and set it up for corporations may face liability. Conversely, such firms may have a claim against influencers who misrepresented themselves or were otherwise fraudulent.

In influencer marketing, nearly everyone has a potential stake in the legal equations involved and may be a plaintiff and/or a defendant. Even individuals may be involved—if an end consumer is falsely induced to procure a good or service based on an ethical/legal violation of influencer marketing guidelines established by the FTC, that person may have a legitimate legal action. Conversely, if individuals passed along false or fraudulent influencer marketing, they may be on the defensive, legally.

Finally, the FTC and related entities will wish to continue consulting and working with experts on this matter, as it will help them to formulate and adapt their influencer marketing guidelines in ways that are fair to both businesses and consumers. In September, the FTC made history, in a crackdown against certain marketing influencers in social media. See, e.g., Kellen Beck, “Scandal prompts FTC to crack down on social media influencers,” Mashable, Sep. 8, 2017, athttp://,mashable.com/2017/09/08/ftc-counter-strike/#Exrs1b.rAqqJ (last visited Nov. 29, 2017). There are a host of prospective litigants and others who may be involved in future issues of this sort, including: social media companies, marketing firms, businesses who use influencer marketing, attorneys in these fields, and myriad expert witnesses. Aside from influencer marketing experts, the following specialists may also help to win or defeat a case (or prevent litigation from occurring): experts in social media, IP, internet and technology, Terms of Service (TOS) and T&C (Terms and Conditions) agreements, contract law, marketing in general, advertising, trade law, and federal regulatory specialists. Any and all of these individuals may prove indispensable to attorneys, corporations, and any or all of the prospective parties mentioned herein.

The FTC offered some guidance on the “dos” and “don’ts” of influencer marketing. See, e.g., Lesley Fair, supra. The “dos” include: (1). Disclosure, which means letting consumers know if a family, friendship, employment, or other potentially problematic relationship exists with a sponsor business; (2). Making disclosures very prominent and noticeable, so that they cannot generally be missed by potential consumers; (3). Treating influencer marketing like any other endorsement, and being clear about the existence of a sponsorship dynamic; and (4). Superimposing mandatory disclosures over images, rather than embedding those disclosures in links or other places that aren’t apparent. See id. Among the “don’ts,” The FTC enumerates: (1). Never assuming that consumers intuitively or otherwise know of a relationship between a company and its influencers, but instead, making that relationship clear; (2). Making no assumptions about a given social media platforms own disclosure tools, and doing such work independently, rather than relying upon those platforms; (3). Never using ambiguous disclosure terms, such as “thanks” (or #thanks), “sp” (for sponsor), or “ambassador” (or #ambassador), etc.; and (4). Not relying upon disclosures that require people to click, in order to see, or in order to see the entirety of, a legally necessary disclosure. See id.

While some of these “dos” and “don’ts” may seem evident to certain people, they are not obvious to all, and the lack of such obviousness is both the problem and the legal issue in many cases involving influencer marketing. Moreover, it is not simply the FTC that is concerned; the Securities and Exchange Commission (SEC) has also gotten involved. See, e.g., David O. Klein, “SEC Issues Warning to Social Media Influencers Endorsing Cryptocurrencies,” Lexology, Nov. 8, 2017, athttps://www.lexology.com/library/detail.aspx?g=004a33f9-c570-4ec0-8555-c65230058a84 (last visited Nov. 29, 2017). As more agencies and even legislatures get involved, everyone involved in influencer marketing, from consumers to corporations, should become aware of how the laws are evolving and what the current rules are. Expert witnesses in this and related fields will prove an invaluable asset in this endeavor.

Conclusion:

Influencer marketing has peaked in recent years, and the trend appears likely to continue, largely unabated. In light of this, attorneys and businesses should be aware of the FTC, SEC, and other regulatory views on this matter, which have shifted over time, and which appear to be geared towards tougher regulations. In fact, mere hours ago, Forbes released warnings and guidance on the FTC’s new policies and demonstrated commitment to cracking down on inappropriate influencer marketing. See, e.g., Forbes Advisory Council, “Getting Into Influencer Marketing? 15 Important Things To Know About The New FTC Guidelines,” Forbes, Nov. 29, 2017. Given both the prevalence of such marketing and the increase in government oversight, litigators in the field should advise corporate clients to retain influencer marketing experts as both: (1). consultants, to prevent litigation and/or minimize the risks of litigation, and as (2). testifying witnesses, in the event that lawsuits are filed. Attorneys for marketing firms, consumers, and individual (or groups of) influencers should also utilize expert assistance in any case of legal ambiguity or a potential rules violation.

It would behoove both prospective plaintiffs and defendants to engage influencer marketing and similar expert witnesses as soon as possible. Moreover, it would be highly beneficial to such parties to utilize these experts’ skill sets to help foster an environment where advertising can successfully flourish, and adherence to the law and ethics is also carefully maintained.

Unauthorized use or reproduction of this site or its content is illegal. This site is the sole property of ForensisGroup, Inc. All rights reserved. Information provided is not legal or professional advice. Publisher assumes no liability in connection with the use of published information.